70% Currency Devaluation due to oil price slide & start of hyper inflation begin to cause problems in Angola

The article's actual headline is pretty stupid & a deliberate diversion by Bloomberg. People will use anything seen as holding it's value as an alternative currency, when the value of the official currency starts to plummet and hyper inflation starts to set in.

In Brazil in the 1980's people used new phone connection permits, because the supply was strictly limited by the government. Phone permits pretty much held their value in terms of man hours of physical labor to buy one, while the value of the official fiat currency - Brazilian Reals plummeted.

Buying beer coupons instead of government issued iou's seems a much better idea. At least beer coupons are backed by something tangible that is worth something. People are always going to want to drink beer and coupons to buy it seem an excellent medium of exchange. Fiat currencies backed by nothing except thin air and people's (misallocated trust) and government iou's on debt that will never, ever, be repaid - not so much.

Comparing beer coupons as a medium of exchange with Ukrainian hryvnia and US Dollar Federal Reserve Notes.

                                     Beer Coupons    Hryvnia    US Dollar

Store of value ✔︎ X X Easily exchanged ✔︎ partially* ✔︎
Divisible into small units ✔︎ ✔︎ ✔︎ Transportable ✔︎ ✔︎ ✔︎ Trustworthy ✔︎ X X Backed by tangible asset ✔︎ X X Large Volume X ✔︎ ✔︎

  • There is a variable but sometimes large difference between the official exchange rate and the black market rate. Exactly as per the current situation in Angola.

There are likely to be capital controls imposed (restrictions of taking quantities of cash out of banks or moving money or assets out of Ukraine).

Both of the above will also apply to the US dollar at some point in the future, when the rest of the world loses confidence in the US Dollar with America's $600bn a year trade deficit and it's exponentially increasing National Debt which will be $40tn around 2025. When confidence in the US Dollar is lost (and it is a question of when, not if) the rest of the world will no longer accept payment in US dollars for goods exported to America and the value of the US Dollar will plummet.

Neither the Hryvnia nor the US Dollar are a trustworthy means of exchange. They are subject to the whims and actions of Central Bankers and politicians, both of which are inherently untrustworthy. Both will act out of personal greed and self interest. Protecting the value of any savings you might have is absolutely the last thing on their minds.

Conclusion

Beer coupons are a far better store of value and medium of exchange than any fiat currency is.

The price of a pint of beer, measured in terms of the minutes of average physical labor required to buy it, is not likely to change very much over the next 50 years. The beer coupon, offering to exchange for the underlying physical asset (beer) will also hold the same intrinsic value, but beer coupons are much easier to carry around in your wallet, than cans of beer.

We can guarantee that the nominal price of a pint of beer as measured in Hryvnia, US Dollars and Euros in 50 years time will have increased by a VERY large amount. This is the process of inflation (or currency devaluation) which is the difference between the amount of new fiat currency created out of thin air by banks issuing new credit (i.e. new debts or loans) and the actual increase in the size of the economy - the total value of all the various kinds of widgets produced (normally measured as GDP). The price of a can of beer in Euro's will likely be infinity, because the Euro is very unlikely to exist in 50 years time and dividing anything by zero gives the answer infinity.

The Angolans should have stuck to beer coupons, instead of changing to a fiat currency backed by nothing. They would have been much better off.

Which is the whole point of the Bloomberg headline above, which seeks to bolster fiat currencies, all of which are inherently untrustworthy while simultaneously seeking to disparage and undermine the trustworthiness of actual money (beer coupons in this case, but I'm sure you can think of at least three or four other examples).

/r/worldpolitics Thread Link - bloomberg.com